Inheritance tax. How much?

Kitchen_Gardener

My dear Mum died recently. She owns a house worth £800,000. She has left her entire estate to be split 3 ways between myself, my sister and my son. She was divorced and had no debts.

How much of the 800k will be left after inheritance tax?

[Deleted User]

Hi,

need more information, savings, investments, any other assets?

Kitchen_Gardener

Probably 10k in savings. NHS pension (not much). No other assets

Flugelhorn

NHS pension is not inherited so just the 10K in savings

I think it would be £325k tax free plus £175K from the residence tax free leaving approx £300K to be taxed 

Quorden

If you Mum had been married then I think you can utilise the Nil Residual Band from her husband. This would provide a further £325k tax free, assuming that none of it had been used.
Lots of good detail here; https://www.litrg.org.uk/tax-guides/bereavement/what-reliefs-and-exemptions-are-there-inheritance-tax

Kitchen_Gardener

She was single.

Keep_pedalling

Quorden said:

If you Mum had been married then I think you can utilise the Nil Residual Band from her husband. This would provide a further £325k tax free, assuming that none of it had been used.
Lots of good detail here; https://www.litrg.org.uk/tax-guides/bereavement/what-reliefs-and-exemptions-are-there-inheritance-tax

As she was divorced rather than widowed that can’t be claimed.After funeral costs anything over £500k is going to be taxed at 40%. The biggest issue with this estate is that therefore s insufficient cash to pay the IHT bill and even if you opt to lay by instalments there is not enough to pay the first  instalment which will be required before you can obtain probate.

Kitchen_Gardener

Sorry I don't understand. How do we get probate? Do we need to sell the house first? 

My sister thought about buying out myself and my son and having the house herself.

I'm so confused....

Alphatauri

You can’t sell the house until you have probate. You can market it but not exchange or complete.

Before you apply for probate you need to pay any IHT or at least make the first payment. There is a time limit to do this.

Flugelhorn

The order of things is:
Apply for probate which includes valuing the estate

Pay any IHT - as mentioned above this could be a significant sum and as there is little cash available then this will have to be in the instalments - they won;t give the probate until the first installment is paid

When you have probate then you can look at selling the house 

prettyandfluffy

Who is/are the Executor(s) of your Mum's Will?